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"Australians are always prepared to make a reasonable contribution if they know their money is not wasted," he said in reference to the $20 billion medical research fund.

But the measure has angered health groups, which warn people will skip treatment or clog hospital emergency departments to avoid the co-payment.

Doctors say the chronically ill, elderly and low-income families will be hit the hardest.

While there was a place for co-payments, the government's model does not have the right protections, Australian Medical Association vice-president Geoffrey Dobb said.

"Access to quality primary care will be more difficult for many Australians."

Catholic Health Australia wants the co-payment monitored to ensure it does not hurt disadvantaged Australians.

Consumer group Choice says households will struggle to cover basic health costs, while the Consumers Health Forum says trading the "Medicare card for the credit card" had shattered the notion of universal health care.

On top of the Medicare co-payment - which also applies to out-of-hospital pathology and imaging services - Australians will also have to pay more for subsidised medicines.

The government wants a $5 increase to the co-payment for taxpayer-subsidised medicines because the Pharmaceutical Benefits Scheme was costing more than $9 billion a year.

Concession card holders will have to pay an extra 80 cents for each prescription, in a measure that will save the budget $1.3 billion over four years.

Australians will also be hit by an indexation freeze on all non-GP Medicare rebates, and by not indexing the income thresholds for the Private Health Insurance Rebate and the Medicare Levy Surcharge.

Savings from the PBS and indexation changes will be pumped into the Medical Research Future Fund, which Mr Hockey says will by the largest of its type in the world by 2020.

The fund will start providing money to medical research from next year, and by 2022/23 would distribute about $1 billion a year.

It may be an Australian who discovers better treatments and even cures for dementia, heart disease or cancer, the treasurer told parliament on Tuesday.

"This new and historic commitment in medical research may well save your life, or that of your parents, or your child."